The U.S. Internal Revenue Service IRS appears to escalate its enforcement capabilities with the program named “Operation Hidden Treasure” dedicated to cryptocurrency tax compliance. According to the agency’s Director of the office of Fraud enforcement, Damon Rowe, the operation aims to search for unreported crypto-related income. Speaking at a Federal Bar Association Virtual tax conference, Rowe favored that cryptocurrency fraud issues will be a priority. IRS Initiates And its Operation of Crypto Tax Compliance Operation Hidden Treasure is a joint effort between the IRS’s criminal investigation unit and the civil office of fraud enforcement. The operation will train agents to look at the blockchains to root out tax evasion among cryptocurrency users. It will exist as part of the office’s emerging threats mitigation team. The IRS employees are also reportedly trained alongside the European Union Agency for Europol, the Law Enforcement Cooperation as a part of the initiative. Carolyn Schenck, National Fraud Counsel in the IRS Office of Chief Counsel, told conference-goers that “the agency is working with private contractors and vendors, presumably blockchain analytics firms, to develop “signatures,” or telltale signs of fraudulent activity.“ These indications include examining those who configure transactions, reporting requirements (like sending a series of $10,000 transactions), using shell corporations to hide funds as well as “getting on and off the chain.” Enforcement vs Crypto HODLers This is not the first time the U.S. Internal Revenue Services is behind Crypto HODLers. The IRS has sent conflicting messages to U.S. crypto holders several times in the past. The most recent update is available on the FAQ page, indicating investors who simply bought “virtual currency with real currency” would not have to report that transaction on this year’s tax returns. Still, using cryptocurrencies for making every-day purchases is typically seen as a taxable event. Operation Hidden Treasure is designed to find, trace, and attribute such transactions to taxpayers, Schenck made the statement “These transactions are not anonymous,” she said. “We see you.”
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